Leveraged Buyout Model

Each topic starts with the same introduction: a short instructional video providing direction for how best to use this website. The work sheet download, however, changes for each introductory video and provides notes relevant to each of the videos that follow in the series.

This video introduces the LBO model. It starts with an integrated financial statement model and adds the components required for LBO analysis.

This video demonstrates the process of running multiple scenarios through your model, and using data tables to view a range of possible outcomes simultaneously.

This is the first of two videos explaining the cash sweep in a simple LBO model. It requires six quick steps so I chose to capture the process in its entirety. The benefit of an unedited tutorial is that it exposes the small habits and tricks that are otherwise not shared. I hope it makes the material more approachable.

Whereas the first video focused on the mechanics of adding a cash flow sweep, the second video will describe what is taking place in your model. We will also be including notes that explain how this is dealt with at the company level.

Recently the FASB announced an update that requires a change to the presentation of debt issuance costs in financial statements. While I would argue that the old presentation is superior to this new requirement for most modeling exercises, it is important to be aware of all GAAP standards as you will encounter them reviewing audited financial statements.

In this video we make the transition from building the model on one worksheet to organizing information on multiple worksheets. As an introduction to this approach, the video focuses on the advantages realized. Per the commentary in the video, the notes associated with this video focus on debt ratio analysis.

In this video the process of adding preferred stock to the model is captured in its entirety. Whether it's another debt tranche or class of preferred stock, if you are building your own models this is a common exercise in the life of a financial analyst.

Whereas the first video introducing the cash sweep limited optional repayment of debt to senior debt, this video walks through a template with optional repayment toggles for all debt tranches. Financial model available for download.

In this video we start to explore equity structure in greater detail and add Class B Common Stock to the model. The video also provides an overview of private equity fund structure.

This video covers the benefits of including preferred stock in the equity structure of a transaction.

A standard private equity distribution waterfall is made complicated only by the amount of vocabulary used to describe how it works. The math is otherise simple, as this video demonstrates.

The purpose of this post is to translate the language surrounding purchase accounting into a financial template with instructions that cover the balance sheet adjustments for most control transactions.

This case study was developed with the objective of identifying junior team members for a private equity firm. If you are a novice, consider building a simple five-year projection using the summary financials. If you have a more advanced skill-set, you can work with the operating model to build something far more detailed. Best of luck!